Brexit, Brussels, and U.S. corporate lobbying

The UK has always claimed to have a special relationship with the U.S. And obviously, it's the natural "home away from home" feeling for every American coming to Europe. They speak the same language.

This fact channeled some of the biggest US corporations to the UK and more specifically to London, from where they orchestrate their European business as well as their EU lobbying operations.

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So over the years, London has emerged into the hub for US cooperate lobbying activity in Europe. Even though Brussels is where the EU lobbying takes place. It's a little like lobbying Washington, D.C. out of Toronto. It doesn't really make sense.

Brexit will change this. Brexit will leave US corporations in London looking into the European Union from the outside. Which they can't afford to do. So Brexit will significantly affect U.S. companies based in London and how they operate in Europe and influence European politics. Brexit will close what U.S. companies saw as their entrance door into the EU.

Within the financial sector in London, U.S. banks and companies are amongst the biggest players and shape EU policies through their lobbying efforts. According to the non-mandatory EU register, the UK financial sector spends a total of €34 million per year on lobbying. The actual amount is estimated to be much higher. A fair share of this amount comes from U.S. companies such as Goldman Sachs, Bank of America and others. With the UK exiting the European Union, companies based in London jeopardize their relations with top EU officials and policy makers and risk losing influence in Brussels.

A similar situation awaits US car companies, who increased their lobbying efforts in the EU in recent years to influence inter alia the CO2 emission targets. Companies such as General Motors and Ford have picked the UK as their European Headquarters for business and lobbying activities. With the TTIP negotiations reaching critical stages, companies based in the UK fear their ability to influence the negotiation talks.

With Brexit, U.S. businesses in London not only lose direct access to the markets of the remaining 27 EU Member States. They are especially risking their influence in the European political arena and are in need to make incisive decisions on their structural company set up in Europe.

So far U.S. companies were able to get away with operating politically from outside Brussels. But they would be well advised to relocate their lobbying resources to the center of EU politics now. They need to look at Brussels as they look at Washington, D.C. And act accordingly.

Geiger is managing partner of leading EU government relations law firm Alber & Geiger.